Compliance Programs – Who Needs Them? What Are They?

To paraphrase a celebrated “redneck” comedian, you know you need an internal program for compliance with United States export control laws if, among other things, your company or research institution:

• exports tangible items from the United States;
• re-exports US-origin products – or exports foreign-produced products of US-origin technology – from abroad;
• engages in “deemed exports” anywhere in the world (by disclosing proprietary US-origin technology to non-US persons, including persons lawfully employed in the United States pursuant to a work visa, such as H-1B or L-1);
• sells product to domestic US companies with knowledge that the domestic purchaser intends
  • to export the items purchased; or
  • to incorporate those items in products that are specifically designed for military use, whether or not the purchaser intends to export those products; or
• develops or manufactures items that are specifically designed for military use, or provides services to other domestic entities that do, whether or not those items ever leave the country.

Such entities have affirmative duties of due diligence under the export control laws – including but not limited to (i) properly classifying their products and technologies under government regulations, and (ii) keeping records of all export transactions –even if their products and technology do not require licenses for most destinations, and in some circumstances even if they do not export anything themselves.

The Federal Organizational Sentencing Guidelines provide that corporations maintaining reasonable regulatory compliance programs are entitled to mitigation of sentences. Accordingly, the duty of care of such companies’ directors and officers virtually mandates that they maintain export control compliance programs. Since criminal convictions can also result in debarment from doing business with the US government, the duty of care is heightened to the extent that a company depends on government business.

Export control compliance programs come in all shapes and sizes. If a classification-analysis of the nature of a company’s products and technology determines that licenses are required only for export to (or disclosure to nationals of) the so-called “embargoed countries”, compliance is largely a matter of keeping required records, documenting the company’s performance of certain due diligence obligations, and training employees to perform those duties. If licenses are required, of course, or if the company operates through affiliates abroad, more elaborate programs – including license applications and internal limitations on access to controlled technologies – may be required.

Export Compliance NE tailors export control compliance programs to the needs and practices of each individual company, assists companies in implementing appropriate programs, and audits existing programs to determine their effectiveness, all at hourly rates substantially lower than those ordinarily charged by large law firms.

For a free risk-analysis of your clients’ compliance obligations, contact vince@canzonerilegal.com.